Texas hospitality group Ashford Inc. is buckling under pressure and will return $70 million in Paycheck Protection Program (PPP) loan money it received due to the coronavirus pandemic, according to The New York Times.
The network of hotels run by Texan Monty Bennett had dozens of PPP applications in the works totaling $126 million. The public outcry that the money should have gone to the neediest of businesses prompted the hospitality group to announce it would return the bulk of the money.
The Dallas-based hotel nexus received $76 million, according to data compiled by The Washington Post. The hospitality group was the biggest recipient of PPP loans and had originally said it deserved the money.
“Total PPP funding for the hotel industry accounts for less than 3 percent of the PPP fund’s initial budget of $350 billion and roughly 1.5 percent of the fund’s total budget today,” Ashford Hospitality Trust said in a statement. “Our companies have not crowded out smaller businesses from receiving funds, as some media reports have suggested. The PPP program was specifically intended for companies like ours.”
The hotel group’s Ashford Inc., Ashford Hospitality Trust, and Braemar Hotels & Resorts — all publicly traded — said in a statement that they would return the money due to “recently changed rules” and “inconsistent federal guidance that put the companies at compliance risk,” Reuters reported.
Among the largest recipients of the Small Business Administration (SBA) loans, the hotel group indicated that it would return a minimum of $70 million. The government reeled in loan requirements after numerous companies like Ashford’s — Ruth’s Chris Steak House, Fiesta Restaurant Group (the parent of Pollo Tropical and Taco Cabana), AutoNation and the Los Angeles Lakers — received loans while the neediest small- to medium-sized businesses (SMBs) were closed out.
Last week, Treasury Secretary Steven Mnuchin said companies had until May 7 to voluntarily return the funds if they did not meet the program’s criteria.